When I mention that I invest in real estate, I usually encounter one of two responses:
- Why invest in real estate? It's too much work and stress.
- I'd love to invest, but I don't have any money.
If you fall into the first category, I understand. Real estate investment is not exactly passive. However, if you're in the second category, I have good news for you: you can invest in real estate with no money. It requires creativity, but there are many ways to get started with little or no money down.
Can You Really Invest in Real Estate With No Money?
Yes, it is possible to invest in real estate with no money. However, if you don't have money, you'll need to bring something else to the table: time, skills, relationships, or sweat equity.
The key is to find people who have the money and make it worth their while to work with you. For example, you can offer your time and expertise to manage the rehabilitation of a property while a partner provides the funds. Alternatively, you can find a great deal and partner with an investor who has money but no good deals.
The lesson here is clear: if you want to invest in real estate with no money, find people who have the money and make it worth their while to work with you.
7 Ways to Invest in Real Estate With No Money
Alright, let's get to the good stuff and discuss some examples of how you can invest in real estate with no money out of your pocket. Here are seven ways you can make it happen:
1. Buy a Primary Home and House Hack
If you can get a 0% down USDA or VA loan, you won't need much money upfront. Even with a conventional loan, you can negotiate with the buyer to cover the closing costs, leaving you with almost no out-of-pocket expenses. This is much better than the 20-30% down payment required for an investment property.
The idea is to find a home that you can live in and also make a good investment. You can rent out rooms to friends while you live there, a strategy known as "house hacking." By doing this, the rent you receive can cover a large portion of your mortgage.
Another option is to purchase a 2-4 unit building, live in one unit, and rent out the others. After a couple of years, you can move out and turn the entire property into a dedicated rental house without having to put any additional money down.
3. Utilize Hard Money or Private Money Loans
If you don't have money but have a good deal, hard money lenders can be a great option. While they charge higher interest rates, they have less stringent requirements compared to traditional banks. With a hard money loan, you can get 100% financing for the purchase and rehabilitation of a property.
Private money loans, on the other hand, are loans from individuals, often with whom you have a personal connection. With these loans, everything is negotiable, including the loan amount, interest rate, and payback terms. Building relationships with private lenders can allow you to invest in real estate with no money down.
5. Wholesaling
Wholesaling is a way to generate cash for down payments on rental properties. It involves finding motivated sellers, putting their properties under contract for a lower price than other investors would pay, and then selling the contract to another investor for a higher price. Wholesaling requires hard work and in-depth knowledge of the market, but it can be a profitable venture.
7. Side Hustle to Generate Cash
If you have a skill other than real estate, you can use it to generate additional income that can be invested in real estate. Become a real estate agent, try eBay flipping, offer virtual assistant services, or take advantage of cashback apps and credit card rewards. These side hustles can provide the extra funds you need to invest in real estate.
Can I Invest in Real Estate if I Have Bad Credit?
Yes, you can invest in real estate with no money and bad credit. Many strategies for buying real estate with no money down also don't require good credit. For example, finding an equity partner, using hard money loans, seller financing, or wholesaling can all be done without relying on personal credit. However, improving your credit score is still recommended for long-term success in real estate investing.
Should I Invest in Real Estate With No Money?
While it is possible to invest in real estate with no money, you need to consider whether it's the right move for you. As you gain experience and own more properties, it becomes easier to invest with no money because of your established track record and connections. However, it's important to have a sizable emergency fund for unexpected expenses.
If you have a little bit of money and want to get started in real estate, you can use the strategies mentioned earlier. Alternatively, you could consider real estate crowdfunding, where you can invest with as little as $10. This passive approach allows you to invest in real estate with only a little money.
Wrapping Up - My Story of Investing With No Money
When I first started in real estate, we had enough cash to purchase one rental property, and then we were low on funds. Through extensive research and utilizing various methods, such as wholesaling and partnering with equity lenders, we were able to jumpstart our investing journey.
Although our investing journey turned into more of a real estate side hustle, we gained valuable knowledge and enjoyed the business of real estate. If you're hesitant to start investing, let me know what's holding you back in the comments.
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